AT&T Broadband Sells Cable Systems

AT&T Broadband Tuesday moved to divest itself of cable systems in Georgia, Illinois, Iowa and Missouri for about $2.22 billion in cash while parent company AT&T struck a deal to sell its 10 percent stake in Japan Telecom Co. Ltd. for $1.35 billion in cash.

Mediacom Communications Corp. will become the eighth-largest cable company in the U.S. when it picks up the cable systems, which serve about 840,000 basic subscribers. The systems on the table serve Albany, Columbus, Tifton and Valdosta, Ga.; Charleston, Carbondale, Effingham, Marion, Moline and Rock Island, Ill.; Ames, Cedar Rapids, Clinton, Davenport, Des Moines, Dubuque, Fort Dodge, Iowa City, Mason City, and Waterloo, Iowa; and Springfield, Mo.

Mediacom, founded in 1995, has grown rapidly through a strategy of expanding into non-metropolitan markets in the U.S. It systems now spread throughout 23 states, passing 2.6 million homes and serving about 1.6 million basic subscribers.

High-speed cable Internet access plays a large role in Mediacom’s strategy, according to founder, Chairman and Chief Executive Officer Rocco Commisso. Commisso said Mediacom will aggressively expand high-speed cable services within the systems it picks up from AT&T Broadband.

“AT&T Broadband has done a tremendous job launching in these systems digital cable and high-speed Internet services,” Commisso said. “This, in part, reflects the fact that about half of the subscribers are served by systems that have been upgraded to 550MHz to 860MHz bandwidth capacity. In keeping with Mediacom’s operating strategy and commitment to first-class customer service, we intend to aggressively upgrade the remaining AT&T Broadband cable systems and deliver to all of our new customers in these communities a state-of-the-art offering of advanced broadband services.

The boards of both companies have approved the transaction and anticipate closing in the second or third quarter of 2001.

Credit Suisse First Boston, JPMorgan and Salomon Smith Barney advised Mediacom in the deal, while Daniels & Associates represented AT&T Broadband in the sale of the Illinois, Iowa and Missouri systems. Waller Capital represented AT&T Broadband in the sale of the Georgia systems.

Meanwhile, AT&T Broadband parent AT&T struck its own deal with wireless operator Vodafone Group Plc to sell its stake In Japan Telecom. Japan Telecom is the parent of mobile network J-Phone Communications Co. Ltd. and its regional wireless operating companies, the J-Phone Group.

The deal will give Vodafone a total stake of 25 percent of Japan Telecom’s equity. The deal is dependent on AT&T delivering the shares at the end of April 2001, when the companies expect to close.

Chris Gent, CEO of Vodafone, said the deal underlined Vodafone’s conviction in the strength of the Japanese market.

Goldman Sachs and UBS Warburg advised Vodafone on the transaction.

News Around the Web